Coal India To Feel The Heat As Modi Government Throws Open The Doors For Commercial Mining

Nearly 44 years after India nationalised its coal sector, the industry has been thrown open for participation by private players, in a move that would bring in competition for state-owned Coal India (CIL), which has till now enjoyed a monopoly over the business.

India nationalised its coal sector in 1973 as the private sector had messed up the industry, starving it of investment. Safety standards were poor and the lives of the miners miserable.

The restrictions of nationalisation then slowly started being removed from the early 1990s. As the first step, private players were allowed to mine coal for captive consumption. Although the public sector coal producer has been gearing up to face private competition ever since the Modi government introduced an enabling provision via the Coal Mines (Special Provisions) Act to end its exclusive right to sell coal, it could still feel the heat.

Private players are expected to use technology-intensive mining practices in contrast with CIL’s labour-intensive techniques. The public sector producer is saddled with an excess workforce, which it cannot downsize easily as a PSU. That means its costs of production would remain on the higher side, hobbling it from competing with private players on equal terms. Read More…